# FedEx Shares Drop 8% as Revenue Forecast is Lowered
In a disappointing turn of events, FedEx shares plummeted 8% in after-hours trading on Tuesday. The package delivery giant revised its revenue forecast downwards due to weaker demand impacting sales. This news comes as a blow to investors who were expecting flat sales year over year.
## Challenging Times for FedEx
FedEx has been facing challenges in its Express unit, which is its largest division. Lower demand, surcharges, and customers shifting to cheaper services have all contributed to the decline in revenue. This is the second consecutive quarter that FedEx has lowered its sales outlook, indicating ongoing struggles for the company.
## Performance vs. Expectations
Let’s take a look at how FedEx performed compared to Wall Street’s expectations:
– Adjusted earnings per share: $3.99 vs. $4.18, according to analysts surveyed by LSEG
– Automotive revenue: $22.17 billion vs. $22.41 billion expected
For the three-month period ending November 30, FedEx reported a net income of $900 million, or $3.55 per share, compared to $788 million, or $3.07 per share, in the previous year. After excluding certain items, the company posted earnings per share of $3.99. Despite the decline in revenue, FedEx attributed its higher profit to cost-cutting initiatives.
## Navigating an Uncertain Demand Environment
FedEx CEO Raj Subramaniam expressed optimism about the company’s progress amidst the challenging demand environment. He stated, “FedEx has delivered an unprecedented two consecutive quarters of operating income growth and margin expansion even with lower revenue, clear evidence of the progress we are making on our transformation as we navigate an uncertain demand environment.”
While the lowered revenue forecast is disappointing, FedEx remains committed to its transformation efforts and cost-cutting initiatives to drive profitability. Investors will be closely watching how the company adapts to changing market conditions and whether it can regain momentum in the coming quarters.
Sources:
– [CNBC – FedEx](https://www.cnbc.com/quotes/FDX/)
– [FedEx Q2 FY24 Earnings Release](https://s21.q4cdn.com/665674268/files/doc_financials/2024/q2/FedEx-Q2-FY24-Earnings-Release.pdf)
